Armani, Burberry and Dolce & Gabbana may grace the grand avenues of Paris and the catwalks of Milan, but these top designer brands now have a new home in Croydon, south London.

The Gold Room at the new Croydon Village Outlet features these brands and more, and offers discounts of up to 75 per cent off the original retail price. The outlet opened last month and is one of a number of new outlet developments planned for the UK.

Another is Wembley’s London Designer Outlet (LDO), which was built by property firm Quintain and is due to open 24 October. The centre will have 85 shops and discounts brands like Superdry, Adidas and LK Bennett. While these outlets will cater for the demand for cheap goods among thrifty shoppers, they are also indicative of a growth in outlet shopping in the UK and around the world.

The footfall in outlets tends to be a bit lower than that of standard shopping centres and high streets, but people are likely to spend more because they are considered a ‘destination’ shop, according to LDO marketing strategist Deborah Owen-Ellis Clark.

You have a much higher conversion-to-shop rate because people go there with the intention to spend

She believes that outlet shopping has grown in popularity as a result of the economic downturn and the squeeze on disposable incomes. Once consumers have been persuaded to visit an outlet centre, she notes, they are more likely to make purchases than in other retail settings because of the temptation to secure bargains.

“What you have instead is a much higher conversion-to-shop rate because people have made a decision to go there with intention to spend,” she says. “That’s where you get very healthy [sales] densities and spends per head.”

She points out that the UK is already well served by popular outlet sites such as Bicester Village in Oxfordshire, Cheshire Oaks and Gunwharf Quays in Portsmouth and suggests that the Wembley complex has the potential for similar success among shoppers in the capital, with 300,000 people located within 20 minutes of the centre.

Outside of London, Malaysian conglomerate Genting began work on Resorts World Birmingham, a new centre next to the NEC in Birmingham earlier this year, which will open in 2015. In addition to a 50-store designer outlet, the £150m complex will have a casino, restaurants and a hotel. And Value Retail, the company behind Bicester Village, has plans to expand in Asia by opening outlets in Suzhou and Shanghai in China over the next two years. The company currently operates nine outlets in Europe (see below).

Bicester Village is understood to have the highest sales density of any shopping centre in the world. According to its owners, the outlet is projected to achieve sales of more than £2,500 per sq ft in 2013, up 25 per cent on 2012. The high levels of spending at Bicester are partly due to Value Retail’s selection of high-end luxury brands such as Alexander McQueen, Burberry and Hugo Boss. The company also targets affluent ‘shopper tourists’ from around the world, who are likely to spend more during holidays or business trips.

Shopper tourists

While tourists make up approximately 38 per cent of footfall across Value Retail’s nine European outlets, they account for 55 per cent of spend, says the company. Overseas visitors are even more prominent at Bicester, where around half of shoppers come from outside the EU. This includes a huge contingent of shoppers from China and other parts of Asia that seek luxury brands at cheap prices.

“Our approach to marketing and the retail experience is very much from a luxury travelling customer’s perspective,” says Sally Beames, director of marketing, PR and tourism at Value Retail. “They are high spenders with high expectations so we work very hard to service their needs and meet those expectations.”

The company works with tour operators, airlines, hotels and local attractions near to its outlet villages to create packages for tourists who want to include a discount shopping experience in their trip. This includes frequent flyer programmes with global airline brands such as Lufthansa and Oneworld that grant members air miles when they spend money in a Value Retail outlet centre.

“Part of our strategy in the last decade has been identifying a niche in the market,” says Beames. “That has involved redefining outlet shopping as a luxury experience, both for the brands and for customers globally.’

LDO’s Owen-Ellis Clark believes that in addition to the tourism benefits, landlords are keen to develop outlet centres because local people will spend money there, even in a downturn. “The outlet market has been the darling of the real estate sector during the recession because it plays to the strengths of customers wanting to get great value for money,” she says. “The old myth of outlets being ‘pile it high and sell it cheap’ places full of damaged stock has gone. They attract people looking for value but without compromising on quality.”

Due to its location in a built-up urban environment, the LDO differs from more traditional, out-of-town shopping outlets that are usually on one level in a ‘village’ arrangement. Instead, it is indoors and split over multiple storeys like a standard shopping centre. The addition of 15 restaurants and a cinema also helps to differentiate the outlet, and it is hoped that it will draw in a significant proportion of the visitors attending events at Wembley stadium each year.

Despite its different, multi-storey layout, the business model of the LDO is similar to other outlet centres in that its leases are closely tied to the turnover of its tenant brands. The arrangement, which is similar department stores, incentivises outlet operators to support their tenant brands to ensure they maximise sales.

“It’s in our own interest to make sure we drive sales so the outlet model is very dynamic from a marketing point of view,” says Owen-Ellis Clarke. “For example, we advise the brands on all the market research we do into the demographics of the local population and their shopping habits. We’ll also ensure that we dovetail any advertising by the brands with our own campaigns and that we promote new product ranges as well as individual stores.”

LDO, which is working with advertising agency Inferno, is running a major out-of-home campaign this month to promote the opening of the centre on 24 October, as well as radio promotions on Heart FM and advertising wraps on the London Evening Standard.

Clark says that although the marketing push will focus on attracting London-based shoppers first and foremost, it will begin to turn its attention to overseas shoppers from next year. The outlet is already looking at having package deals with hotels and tour operators.

Meanwhile, Resorts World Birmingham in Britain’s second city, is also likely to attract tourists because of its close proximity to Birmingham Airport.

Genting’s managing director of development Steve Myers says the outlet centre is intended to act as a further draw to potential visitors, both domestically and internationally. “From our research we can see there’s a very strong demand for a resort like this,” he says. “People are always looking for an alternative shopping experience and this is a specific, destination-led property.”

Value Retail

Value Retail was founded by US property entrepreneur Scott Malkin, who set up its first outlet centre at Bicester Village in Oxfordshire in 1995. Since then, the outlet has delivered double-digit sales growth each year and is widely thought to have the highest sales density – measured in sales per sq ft – of any shopping centre in the world.

Today, the company operates nine outlets across Europe, including centres close to Milan, Munich, Dublin, Barcelona and Paris. Each village offers discounts on previous seasons’ collections of fashion and lifestyle brands. This year is the 10th anniversary of Chic Outlet Shopping – the umbrella brand used across all the villages.

The brand has sought to distinguish itself within the outlet shopping market through a focus on luxury brands and high quality service. This is reflected by its own programme of events and celebrity partnerships. For example, each year Bicester Village hosts the British Designers’ Collective – an exclusive fashion event where UK-based designers showcase their work and sell it at up to 60 per cent off. Previous hosts of the event include singer Rita Ora and actress Thandie Newton.

Value Retail also has a strong focus on attracting ‘shopper tourists’ and notes that the average basket of non-EU tourists is more than twice that of other visitors. EU shoppers’ average spend across its outlets is €301 compared to €801 for non-EU tourists.

The company seeks to cater for these visitors by offering package deals in partnership with tour operators, airlines and hotels located close to its villages. In addition, last month Value Retail launched a MICE (meetings, incentives, conferences and exhibitions) strategy aimed at hosting bespoke events and business conferences across its villages. It reports that it has already had 22,000 delegates from 31 countries attend 280 events across its locations so far this year.

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